View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

TWENTY-FIRST ANNUAL REPORT
OF THE

FEDERAL RESERVE BANK
OF RICHMOND

FOR THE YEAR ENDED DECEMBER 31, 1935

FREDERIC A. DELANO
Chairman and Federal Reserve Agent




TWENTY-FIRST ANNUAL REPORT
OF THE

FEDERAL RESERVE BANK
OF

RICHMOND

FOR THE YEAR ENDED DECEMBER 31. 1935




FREDERIC A. DELANO
Chairman and Federal Reserve Agent

DIRECTORS AND OFFICERS
OF THE

FEDERAL RESERVE BANK OF RICHMOND
FOR YEAR 1936
DIRECTORS

Cla«s A
CHAS. E. RIEMAN, 1930,

PRESIDENT, WESTERN
BALTIMORE, MO.

BALTIMORE, MD.

JAMES C. BRASWELL, 1937,
ROCKY MOUNT, N.

C.

L. E. JOHNSON, 1938,

NATL. BANK OF BALTIMORE,

PRESIDENT, PLANTERS NATL. BANK & TRUST CO.,
ROCKY MOUNT, N. C.
PRESIDENT, FIRST NATIONAL BANK,
ALDERSON, W. VA.

ALDERSON, W. VA.

Class B
CHAS. C. REED, 1936,

VICE-PRESIDENT, WILLIAMS & REED, INC.,
WHOLESALE DRY GOODS,
RICHMOND, VA.

RICHMOND, VA.

JOHN H. HANNA, 1937,

PRESIDENT, CAPITAL TRANSIT CO.,
WASHINGTON, D. C.

WASHINGTON, D. C.

EDWIN MALLOY, 1938,
CHERAW, S.

PRESIDENT AND TREASURER, CHERAW COTTON MILLS, INC.,
CHERAW, S. C.

C.

Class C
.., 1938,

CHAIRMAN OF THE BOARD AND
FEDERAL RESERVE AGENT.

FREDERIC A. DELANO, 1936,
WASHINGTON, D. C.

ROBERT LASSITER, 1937,
CHARLOTTE, N. C.

DEPUTY CHAIRMAN OF THE BOARD,
RETIRED RAILWAY EXECUTIVE AND CONSULTING ENGINEER
CHAIRMAN OF BOARD, MOORESVILLB COTTON MILLS,
MOORESVILLE, N. C.

OFFICERS
GEORGE J. SEAY,
GOVERNOR.

CHAIRMAN OF THE BOARD AND
FEDERAL RESERVE AGENT.

R. H. BROADDUS,
DEPUTY GOVERNOR.

J. G. FRY,
ASSISTANT FEDERAL RESERVE AGENT.

J. S. WALDEN, JR.,
DEPUTY GOVERNOR.

GEORGE H. KEESEE,
CASHIER.




T. F. EPES,
AUDITOR.

ALBERT S. JOHNSTONE,
MANAGER, PERSONNEL AND SERVICE

JOHN T. GARRETT,
MANAGER, BANK RELATIONS DEPARTMENT.

W. W. DILLARD,
ASSISTANT CASHIER.

EDWARD WALLER, JR.,
ASSISTANT CASHIER.

COUNSEL
MAXWELL G. WALLACE.
MEMBER FEDERAL ADVISORY COUNCIL
CHAS. M. GOHEN, 1936,
PRESIDENT, FIRST HUNTINGTON NATIONAL BANK,
HUNTINGTON, W . VA.

DIRECTORS AND OFFICERS
OF THE

FEDERAL RESERVE BANK OF RICHMOND
FOR YEAR 1936
(Continued)
BALTIMORE BRANCH
DIRECTORS
HUGH LEACH, 1936

MANAGING DIRECTOR.

BALTIMORE, MARYLAND.
M. M. PRENTIS, 1936,
BALTIMORE, MARYLAND.

PRESIDENT, FIRST NATIONAL BANK,
BALTIMORE, MARYLAND.

LEVI B. PHILLIPS, 1937.
CAMBRIDGE, MARYLAND.

PRESIDENT, NATIONAL BANK OF CAMBRIDGE,
CAMBRIDGE, MARYLAND.

L. S. ZIMMERMAN,, 1938,
BALTIMORE, MARYLAND.

VICE-PRESIDENT, MARYLAND TRUST CO.,
BALTIMORE, MARYLAND.

NORMAN JAMES, 1936,
BALTIMORE, MARYLAND.

PRESIDENT, T H E JAMES LUMBER CO.,
BALTIMORE, MARYLAND.

., 1937,
., 1938,

OFFICERS
HUGH LEACHJ MANAGING DIRECTOR.
JOHN R. CUPIT, CASHIER.
J. A. JOHNSTON, ASSISTANT CASHIER.
F. W. WRIGHTSON, ASSISTANT CASHIER.

CHARLOTTE BRANCH
DIRECTORS
W. T. CLEMENTS, 1936,
CHARLOTTE, N. C.

MANAGING DIRECTOR.

ROBERT GAGE, 1936,
CHESTER, S. C.

VICE-PRESIDENT AND CASHIER, COMMERCIAL BANK,
CHESTER, S. C.

W. H. WOOD, 1937,
CHARLOTTE, N. C.

PRESIDENT, AMERICAN TRUST COMPANY,
CHARLOTTE, N. C.

C. L. COBB, 1938,
ROCK HILL, S. C.

ACTIVE VICE-PRESIDENT, PEOPLES NATIONAL BANK,
ROCK HILL, S. C.

ROBERT E. HENRY, 1936,
GREENVILLE, S. C.

PRESIDENT AND TREASURE:, DUKEAN MILLS,
GREENVILLE, S. C.

... 1937.
.., 1938.

OFFICERS
W. T. CLEMENTS, MANAGING DIRECTOR.

R. L. CHERRY, CASHIER.
L. D. BROOKS, ASSISTANT CASHIER.







FEDERAL RESERVE BANK
OF RICHMOND

March 30, 1936.
BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM,

Washington, D. C.
GENTLEMEN :

I have the honor to submit herewith the Twenty-first
Annual Report of the Federal Reserve Bank of Richmond,
for the year ended December 31, 1935.




Respectfully,
FREDERIC A. DELANO,

Chairman of the Board and
Federal Reserve Agent.

COMPARATIVE STATEMENT OF CONDITION
RESOURCES
RESERVES:
Dec. 31,1935
Gold Certificates on Hand and Due from U. S. Treasury. .$231,954,014.30
Redemption Fund—F. R. Notes
1,282,665.00
Legal Tender Notes and Silver Certificates
11,799,374.00
National and Federal Reserve Bank Notes
705,240.00
Silver and Minor Coin
1,144,164.03
Total Reserves
$246,885,457.88
EARNING ASSETS:
Bills Discounted—Secured by U. S. Government Obligations, direct and/or fully guaranteed
45,000.00
Bills Discounted—All Other
12,950.00
Total Bills Discounted
Bills Purchased in Open Market
Industrial Advances (under Section 13b)
United States Government Securities
Total Earning Assets
DUE FROM FOREIGN BANKS
F. R. NOTES OF OTHER F. R. BANKS
UNCOLLECTED ITEMS:
Transit Items
Exchange for Clearing House
Other Cash Items
Total Uncollected Items
MISCELLANEOUS ASSETS:
Fiscal Agency Expenses, Reimbursable
Bank Premises (Richmond and Baltimore)
Other Real Estate
Claims Account Closed or Suspended Banks
Miscel. Assets acquired in settlement of closed banks
Federal Deposit Insurance Corp. stock
All Other Resources
Total Miscellaneous Assets...

Dec.31,1934
$185,213,117.66
1,923,050.00
7,454,833.00
4,556,820.00
1,247,855.95
$200,395,176.61
76,123.36
64,238.34

57,960.00
174,654.88
4,460,261.53
116,715,500.00

139,361.70
209,020.25
1,539,506.66
103,562,500.00

121,408,366.36
24,589.72
3,411,010.00

105,460,388.61
80,595.46
4,050,250.00

45,665,838.29
2,058,476.35
874,907.42

35,920,291.09
1,344,167.52
483,655.27

48,099,222.06

37,748,113.88

40,841.69
2,918,780.23
828,859.58
284,177.00
120,065.92
6,808,291.43
89,656.77

42,199.87
3,027,338.77
351,689.00
887,734.52
5,808,291.43
110,146.91

9,590,672.62

10,227,400.50

$429,419,218.09

TOTAL RESOURCES

$857,901,925.06

$ 4,589,600.00
6,185,758.09
3,863,384.16
13,188,742.24

$ 4,975,000.00
5,185,758.09
956,610.43
11,117,868.52

165,767,245.38
13,188,661.94
1,076,822.00
744,803.30
1,688,298.73

124,825,996.76
8,584,908.49
728,985.14
139,454.26
855,997.36

182,455,831.85

185,135,342.01

1,473,608.77
43,286,049.89
44,759,658.66
181,522,750.00

8,989,184.95
32,598,910.10
36,688,096.05
167,824,590.00

5,843.54
400,000.00
1,111,768.47
5,808,291.43
17.23
216,320.17
7,542,235.84

3,443.35
400,000.00
1,015,685.90
5,808,291.43
70.48
9,038.32
7,236,529.48

LIABILITIES
CAPITAL:
Capital paid in
Surplus (Section 7)
Surplus (Section 18b)
Total Capital
DEPOSITS:
Member Banks—Reserve Account
United States Treasurer—General Account
Participation in Due to Foreign Banks
Officers* Checks and Drafts
Other Deposits
Total Deposits
DEFERRED AVAILABILITY CREDITS:
United States Treasurer
All Other Transit Items
Total Deferred Availability Credits
F. R. NOTES IN ACTUAL CIRCULATION
MISCELLANEOUS:
Reserve for Expenses Accrued and Unpaid
Reserve for Self Insurance
Reserve for Losses
Reserve—Federal Dep. Insurance Corp. stock
Unearned Discount
All Other Liabilities
Total Miscellaneous Liabilities
TOTAL LIABILITIES
Commitments to make Industrial Advances



$429,419,218.09

$357,901,925.06

$ 2,289,224.84

$

411,900.00

TWENTY-FIRST ANNUAL REPORT
FEDERAL RESERVE BANK OF RICHMOND

GENERAL BUSINESS CONDITIONS
STATISTICAL SUMMARY
Debits to Individual Accounts (23
Cities)
Number of Commercial Failures, 5th
District
Liabilities Involved in Failures
Cotton Consumption, 5th District Mills
(Bales)
Cotton Grown in 5th District (Bales)....
Cigarettes Manufactured in 5th District
Total Taxes on Tobacco Products, 5th
District
Tobacco Grown in 5th
District
(Pounds)
Building Permits Issued, 31 cities
Value of Building Permits, 31 Cities
Value of Contracts Awarded, 5th District
Total Sales, 31 Department Stores, 5th
District
Total Sales, 58 Wholesale Firms, 5th
District
Bituminous Coal Mined in 5th District
(Tons)

1935

1934

$ 12,211,838,000

$ 10,963,718,000

$

496
7,940,557 $

2,629,282
1,360,000
112,271,879,000

650
11,025,607

2,451,293
1,345,000
104,023,488,000

$

364,908,421 $

340,631,465

$

774,615,000
27,255
52,943,883

$

580,183,000
21,443
30,876,926

$

203,195,274

$

185,791,734

$

101,823,406

$

94,313,531

54,092,012 $

54,393,066

$

110,154,000

108,950,000

Nearly all lines of trade and industry in the Fifth Federal
reserve district showed improvement in 1935 in comparison
with 1934, and the past year would have been regarded as an
unusually good one if prices for the leading crops grown in
this district had not been materially lower than in the earlier
year. Debits to individual accounts figures in clearing house
banks in 23 cities increased 11 per cent last year, reflecting a
larger volume of business passing through the banks. The
number of business failures in the Fifth district decreased 24
per cent in 1935 in comparison with the number of defaults
in 1934, and aggregate liabilities involved last year were 28
per cent less than those of the preceding year. Cotton consumption in textile mills of the district rose 7 per cent, and



TWENTY-FIRST ANNUAL REPORT OF THE

8

the number of bales of cotton grown in the Carolinas and Virginia increased 1 per cent last year. Tobacco manufacturing
in 1935 set a new record for output, and taxes paid to the
Federal Treasury on manufactured tobacco products rose 7
per cent above taxes paid in 1934. Tobacco grown in the
Fifth district last year increased 34 per cent over production
in the preceding year. Construction work, which had been
very small for several years, advanced materially in 1935, and
the value of building permits issued in 31 leading Fifth district cities rose 71 per cent above 1934 valuation figures. Contracts actually awarded in 1935 rose 9 per cent above 1934
figures. Total sales in 31 Fifth district department stores rose
8 per cent in 1935 in comparison with 1934 sales, but wholesale sales by 58 firms declined 1 per cent in the later year.
Bituminous coal production in the district advanced 1 per
cent in 1935 over production in 1934. Production figures for
nearly all farm products were larger than the production figures for 1934, but 1935 prices were lower for the leading
crops in this district and on the whole the year was probably
not quite as satisfactory to farmers as the earlier year.
VOLUME OF BUSINESS
The following table shows the volume of work handled by
the principal departments of the Bank during the year 1935,
as compared with the year 1934:
ITEMS

Per Cent of
Increase or
Decrease

1935

1934

272
10,046,000

2 132
20,887',000

—87.24
—51.90

59,518,000
$10,436,538,000

55,643,000
),638,415,0O0

+ 6.96
+ 8.28

301,666
305,207,000

335,490
294,510,000

—10.08
+ 3.63

172,238,740
647,062,000

157,102,928
602,734,000

+ 9.63
+ 7.35

169,425,377
641,888,000

159,905,668
611,660,000

+ 5.95
+ 4.94

BILLS DISCOUNTED AND
BOUGHT:

Number
Amount

$

CHECKS HANDLED BY TRANSIT
DEPARTMENT :

Number
Amount

NON-CASH COLLECTIONS

Number
Amount

$

CURRENCY RECEIVED AND

COUNTED

(Includes

notes):
Number of pieces
Amount
CURRENCY P A I D

OUT

cludes redemptions) :
Number of pieces
Amount




new

(In-

FEDERAL RESERVE BANK OF RICHMOND

1935

ITEMS

1934

Per Cent of
Increase or
Decrease

COIN RECEIVED AND COUNTED

(Includes new) :
Number of pieces
Amount

$

181,056,373
185,559,470
14,546,000 $ 15,967,000

— 2.43
— 8.90

$

185,801,086
179,958,900
14,610,000 $ 16,268,000

— 3.14
—10.19

68,161
58,653
$ 4,215,252,000 $4,005,232,000

—13.95
+ 5.24

208,916
$ 613,576,000

+ 85.40
+ 37.69

COIN PAID OUT (Includes re-

demptions) :
Number of pieces
Number
.
TRANSFERS OF FUNDS
MEMBER BANKS:

FOR

Number
Amount
FISCAL AGENCY WORK: U. S.

securities received, issued,
redeemed, cancelled or exchanged : *
Number
Amount

$

387,338
844,859,000

•Includes Federal Intermediate Credit Bank debentures and Federal Land Bank bonds.

On the whole, the figures in the table indicate that a
larger volume of work was handled in 1935 than in the preceding year. Bills discounted or bought declined from the
small number handled in the previous year, and the number
of coins received or shipped, the number of non-cash collections handled, and the number of wire transfers of funds for
member banks also declined last year. On the other hand,
the number of checks and other cash items handled by the
Transit department reached a new high level in 1935, and the
number of pieces of currency received or shipped also increased. Fiscal Agency work for the Federal Government
nearly doubled in the volume of work handled in 1935 over
1934.
FINANCIAL RESULTS OF OPERATIONS

Gross earnings of the Federal Reserve Bank of Richmond
in 1935 exceeded gross earnings in 1934, and when expenses
had been paid there was left as profit $94,683, of which
$27,969 was transferred to surplus (Section 13B) and $66,714
was paid to the United States on advances by the Treasury on
account of industrial loans made by the Bank. As in the preceding year, the bulk of earnings in 1935 came from Government security holdings, proceeds from this source making up
82.3 per cent of total earnings. Discounts for member banks
yielded only three-tenths of 1 per cent of 1935 earnings, and
miscellaneous earnings from industrial advances, fees on commitments, bills purchased and other sources made up 17.4
per cent of gross earnings. In 1934 receipts from holdings of



10

TWENTY-FIRST ANNUAL REPORT OF THE

The following is a condensed statement of receipts and
disbursements for the year 1935, the amounts being shown
to the nearest dollar:
ITEMS

Total
Earnings

Annual
Rate of
Earnings

Bills Discounted
Bills Purchased
Interest Earned on Industrial Advances.
Fees on Industrial Loan Commitments...
Interest on U. S. Securities Held
Other Earnings

;

6,431
1,330
236,221
18,938
1,836,042
132,893

.0232
.0073
.0599
.0100
.0161

Total Gross Earnings.
Current Expenses

$2,231,855
1,840,083

.0187

Current Net Earnings
Additions to Current Earnings.

391,772
274,771

Account of Reserves, Depreciations, etc.

666,543
278,213

Net Profit
Dividends Paid
Balance (Profits)

$ 388,330
293,644
$

94,686

Government securities made up 92 per cent of gross earnings,
receipts from discounts made up 3 per cent, and receipts from
miscellaneous sources made up 5 per cent.
Current expenses of the Bank in 1935 exceeded 1934 expenses by $206,114. The costs of making loans, discounts
and investments decreased in 1935, and so did the costs of
transit and collections work and general accounting. On the
other hand, the costs of handling currency and coin rose last
year, and there was also an increase in costs for Fiscal Agency
work not reimbursable to the Bank. The general expenses of
the Bank, including supervision, protection, insurance of various types, and assessment for expenses of the Board of Governors of the Federal Reserve System, were higher in 1935
than in 1934.
EXPENSES OF OPERATION IN 1935
The expenses of Federal Reserve Banks are incurred in the exercise
of functions prescribed by law, which involve the rendering of services
directly to the United States Treasury, other Government Agencies, and
to member banks, and through membr banks indirectly to the entire business communty—agricultural, industrial, and commercial.
Federal Reserve Banks—furnish an elastic currency; afford means of
rediscounting commercial and agricultural paper; make loans to established
industrial or commercial businesses, either direct or through financing institutions, for the purpose of providing working capital; act as fiscal agents
of the U. S. Treasury Department, and other Government Agencies; pay
checks and warrants drawn on the Treasury of the United States; exercise
the functions of Sub-Treasuries in the supply, exchange, and redemption of
currency and coin; effect the par clearance of checks on a large majority



FEDERAL RESERVE BANK OF RICHMOND

11

of the banks of the country; collect for member banks maturing notes,
drafts, etc.; effect the transfer of funds by telegraph and mail, and make
daily settlement between all Federal Reserve Districts; and perform other
public services.
The expenses of conducting the operations of the Federal Reserve Bank
of Richmond for the year 1935, divided according to functions, were as
follows:
CURRENCY AND COIN
The cost of receiving and handling 172,238,740
pieces of currency aggregating $647,062,300
of which 113,347,274 pieces had been in circulation and had to be sorted and counted;
paying or shipping out 169,425,377 pieces^ of
currency aggregating $641,887,600; receiving
and handling 181,056,373 pieces of coin aggregating $14,545,500; paying or shipping
out 179,958,900 pieces of coin aggregating
$14,609,600 was
$114,279.42
The shipping charges (postage, expressage and
insurance) on currency and coin to and from
out-of-town members amounted to
120,326.52
Assessments by the Treasury Department to
cover the cost of printing and maintaining
an adequate supply of new Federal Reserve
Currency and the cost of redeeming and destroying Federal Reserve Notes and Federal
Reserve Bank Notes unfit for circulation,
plus the shipping charges thereon between
the bank and Washington and the shipping
charges on fit F. R. Notes between the bank
and other Federal Reserve Banks amounted
to
83,004.90
Total Cost
LOANS, REDISCOUNTS AND INVESTMENTS
The cost of making discounts and advances to
38 member banks: 272 notes aggregating
$8,862,591, were received, examined and discounted; 723 notes collateral to member bank
notes aggregating $1,119,122 were received,
examined and handled; 3 pieces of marginal
or excess collateral, aggregating $19,325,
were received, examined and handled; includes the cost of special handling accorded
79 notes aggregating $2,294,962 paid before
maturity and the unearned discount rebated;
handling 248 applications for advances to industry for working capital under Section 13b
of the Federal Reserve Act, as amended, aggregating $10,920,283 net, of which amount
applications aggregating $4,479,533 were approved; also includes the cost of credit investigations, securing and analyzing commercial and bank statements, maintaining credit
files, etc
$ 76,607.83
The cost of effecting 2,217 transactions in the
purchase and sale (in the open market) of
government securities for out-of-town banks,



$ 317,610.84

12

TWENTY-FIRST ANNUAL REPORT OF THE
aggregating $197,714,471 and the cost of receiving, verifying and holding securities
pledged as collateral to notes, and for safekeeping, and maintaining the proper records
thereof, as follows: receiving 147,036 pieces
aggregating $603,987,080; shipping 133,297
pieces aggregating $632,564,170; holding in
our vaults throughout the year securities as
collateral to discounts or for safekeeping,
ranging from $87,210,000 to $135,811,000
was
14,987.76

Total Cost
$
TRANSIT AND COLLECTION
Handling and collecting 53,648,000 checks for
member banks, aggregating $9,266,024,000,
cost
$158,808.85
Handling 898,530 checks aggregating $32,428,600 returned unpaid for various reasons
cost
14,998.51
Handling 301,666 non-cash collection items
(maturing notes, drafts, coupons, etc.), aggregating $305,207,000 cost
44,496.30
Total Cost
ACCOUNTING
This function includes:
The general books, capital stock records, issuing and recording official checks.
The member bank accounts—both reserve accounts and deferred accounts—and the calculation of deficiencies in reserve, if any, and
the assessments of penalties for deficiencies
as prescribed by law.
The accounts with other Federal Reserve
Banks, and the operation of the Gold Settlement Fund through which $12,659,005,000
was received from and paid to other Federal
Reserve Banks and Branches, the Treasurer
of the United States, and the Federal Reserve Agent.
The transfers of funds for account of member
banks of which there were 58,653 aggregating $4,215,252,000.
The accounting involved in making all the expenditures of the bank.
The accounting and other expenses in connection with closed or suspended banks.
Planning new accounting forms and systems
and making changes in old forms as the need
therefor arises.
" Total Cost
FISCAL AGENT OF THE UNITED STATES
Services rendered as Fiscal Agent of the United
States Government:
Receiving, proving and crediting to banks, preparing schedules, cancelling and shipping to
Washington 464,838 Government (direct)



91,595.59

$ 218,303.66

$ 130,793.51

FEDERAL RESERVE BANK OF RICHMOND

13

coupons aggregating $12,586,000; receiving,
examining, paying, and listing according to
Treasury regulations 4,485,000 Government
checks (including 529,000 Work Relief
checks) aggregating $487,651,000 and shipping them to Washington; maintaining the
general account of the Treasurer of the
United States; the custody of securities held
in safekeeping for Government officials; and
securing foreign exchange data for the Secretary of the Treasury cost
$ 42,540.54
Fiscal Agency work for the U. S. Treasury Department principally relating to the issue of
82,840 pieces of direct government securities
amounting to $281,201,000; the redemption
of 180,751 pieces amounting to $235,085,000;
the exchange and transfer of 11,028 pieces
amounting to $204,856,000; the redemption
of war savings and thrift stamps 90 pieces
amounting to $591; the receipt of subscriptions and payments for new issues, the handling of the war loan depositary accounts, the
custody of a stock of securities ranging from
$181,432,000 to $265,714,000 cost
116,722.98
Total Cost
Reimbursed by Treasury Department

$159,263.52
68,344.66

Net Cost to the Bank
$
Services performed as Fiscal Agent, Depositary, and Custodian for Government Agencies: namely, the Reconstruction Finance
Corporation, Federal Emergency Administration of Public Works, Federal Farm Mortgage Corporation, and the Home Owners'
Loan Corporation, cost
270,435.54
Reimbursed by Government Agencies....
237,572.96
Net Cost to the Bank

$

GENERAL EXPENSES—NOT ALLOCATED
TO THE ABOVE FUNCTIONS
General overhead and supervisory expenses $131,023.70
Directors' fees and traveling expenses
6,475.09
Governors', Fedral Reserve Agents' and Federal Advisory Council Conferences
1,478.18
Our proportions of the expenses of the Board
of Governors of the F. R. System
55,529.35
Operation of the banking houses at Richmond,
Baltimore and Charlotte (includes salaries
of superintendent, mechanics, firemen, janitors, elevator operators, etc., and rent, light
and power, heat, taxes, fire insurance, repairs and alterations, etc.)
$176,680.53
Less amount charged Fiscal Agent
function
33,514.14 143,166.39*
The provision of personnel
25,410.96



90,918.86

32,862.58

14

TWENTY-FIRST ANNUAL REPORT OF THE

Legal expenses ...„
Maintaining the general audit of the Bank and
branches
Work of the Federal Reserve Agent's Department, including issuance of Federal Reserve
notes, custody of collateral therefor, custody
of reserve stock of Federal Reserve notes,
the examination of member banks, preparing
and publishing the Monthly Review of Business and Agricultural Conditions, assembling
various statistical data, etc
Bank relations work; visiting and advising, and
conferences with member and non-member
banks
Handling incoming and outgoing ordinary and
registered mail
Protection—Salaries of special officers and
watchmen, and other protective services
Other general services, including purchasing of
supplies and equipment, operating the office
supplies and stationery stock room, telephone
service, filing and caring for old records, operating duplicating processes, salaries of
general office boys, operation of automobile
trucks, and repairs to equipment
Postage on ordinary mail
Insurance—Employees' fidelity, Bankers' blanket bond and burglary, Workmen's Compensation, Fire—equipment and supplies, automobile and Contribution to Retirement System of Federal Reserve Banks

9,037.19
28,567.76

102,974.81
15,670.25
21,551.54
99,600.57

67,767.54
87,878.50

157,810.63

Total Cost

$ 953,942.46

Total Operating Expense

$1,836,027.50**

*No deduction is made from this item for rent actually paid to us
for space, amounting to $20,024.00.
**The total Operating Expense during 1935 was $4,055.85 less than
the total amount of expenditures charged to the Current Expense account
of the Bank during the year. The difference represents the excess of
office supplies, printing and stationery and postage purchased during the
year, and charged to the Current Expense account, over the amount of
such supplies actually used during the year and charged to the proper
functions in the above statement of Operating Expense.

DISCOUNT OPERATIONS

Discounts at the Federal Reserve Bank of Richmond in
1935 were lower in every month than in the corresponding
months in 1934. The highest daily average of discounts in
1935 occurred in June, and amounted to $368,877, and the
lowest daily average was $73,803 in November. Discounts
rose each month in 1935 through June, but declined materially in July. August and September discounts again rose, after
which a decline occurred through October and November.



FEDERAL RESERVE BANK OF RICHMOND

15

December witnessed a slight rise over November figures.
Paper discounted in 1935 totaled $8,882,942, in comparison
with $18,250,437 in 1934, and the daily average amount of
paper under discount was $210,000 last year in comparison
with $1,260,000 in 1934.
Of the total volume of 1935 discounts, 85.1 per cent was
secured by Government obligations, compared with 30.7 per
cent similarly secured in 1934. Discounts otherwise secured
or unsecured made up 14.9 per cent of total discounts at the
Federal Reserve Bank of Richmond in 1935, compared with
69.3 per cent in 1934. The discount rate on eligible paper at
the Bank was 3 per cent from the first of the year 1935 to
January 11, but on that date the rate was lowered to 2*4 per
cent and on May 9 a further reduction to 2 per cent was made.
The rate remained at the last named figure through the balance of the year. A few loans were made to member banks
at a higher rate than the prevailing one, under authority of
Section 10 (b) of the Federal Reserve Act, as amended.
INDUSTRIAL LOANS

Industrial loans under authority of Section 13b of the
Federal Reserve Act, as amended, increased materially in
1935. These loans provide working capital for corporations,
firms and individuals which are entitled to credit but cannot
obtain it through the usual channels, and have a maximum
maturity of five years. Applications amounting to $10,920,283
were received from industrial or commercial enterprises in
1935, of which loans totaling $4,479,533 were approved,
either outright or conditionally, loans totaling $7,195,250
were rejected, and loans totaling $310,000 were still under
consideration on December 31. These figures include $1,064,500 in loans carried over to 1935 for final disposition from
applications filed in 1934. Of the applications totaling $4,479,533 which were approved, loans totaling $2,900,000 were
actually made and the funds advanced before the end of 1935.
In addition to the loans made, the Bank on December 31, 1935,
stood committed to assume $2,289,225 of industrial loans made
by banks, in the event that the lending banks wish to secure
funds on the loans before expiration of the commitments.
CHECK COLLECTIONS
The Transit Department of the Bank handled a larger
number of checks in 1935 than in any other year since the
organization of the Federal Reserve System, and the daily
average number of items handled also set a new record. The
department cleared 59,518,000 checks in 1935, with a daily
average of 197,734, compared with 55,643,000 checks cleared
in 1934, a daily average of 184,860. The average amount of



16

TWENTY-FIRST ANNUAL REPORT OF THE

each item handled in 1935 was $175, a higher figure than
$173 in 1934 or in any year since 1931, when the average
amount per item was $198. The aggregate amount of all
checks cleared in 1935 was $10,436,538,000, the highest
amount cleared in any year since 1930. Of the 59,518,000
items handled last year, 7,447,000 items were drawn on banks
outside the Fifth reserve district and were forwarded to other
reserve banks or branches, and 4,485,000 items were drawn
on the Treasurer of the United States. The number of items
drawn on outside banks in 1935 rose 9.8 per cent over 1934,
but the number drawn on the Treasurer of the United States
declined by 35.4 per cent.
Cash letters forwarded direct to other Federal Reserve
banks and branches by member banks in the Fifth district, for
collection and credit to the reserve accounts of the sending
banks at the Federal Reserve Bank of Richmond, numbered
202,384 last year, totaling in amount $1,934,421,000, as compared with 200,515 cash letters amounting to $1,736,917,000
sent direct to other districts in 1934. The direct routing of
cash items results in a saving of transit time in securing credit
to reserve accounts.
NON-CASH COLLECTIONS

In 1935 the Collection department, which undertakes to
collect notes, acceptances, drafts and securities for member
banks, handled 301,666 items, a decrease of 10.1 per cent in
comparison with 335,490 items handled in 1934, but the aggregate amount of $305,207,000 involved in the items handled
last year exceeded by 3.6 per cent the amount of $294,510,000
involved in the items handled in 1934. The average amount
of the 1935 items was $1,012, an increase of 15 per cent over
the average of $878 per item handled in 1934.
GOLD SETTLEMENT FUND

The Gold Settlement Fund, in the custody of the Board of
Governors of the Federal Reserve System in Washington,
serves as a clearing pool for transactions between Federal
Reserve banks. On January 1, 1935, the Federal Reserve
Bank of Richmond had a credit of $38,879,000 in the Fund,
and at the close of business December 31, 1935, the credit
had risen to $55,955,000. During the year the Bank received
through the fund, from other reserve banks and branches and
from other sources, a total of $6,338,038,000, while the Bank
paid out through the Fund a total of $6,320,962,000. Receipts
exceeded disbursements by $17,076,000. Balances in the Gold
Settlement Fund fluctuate widely from day to day as credits
shift from one reserve district to another.
The following table shows the total receipts from and pay


17

FEDERAL RESERVE BANK OF RICHMOND

ments to other Federal Reserve banks on account of daily
transit clearings, with percentages:
(000 omitted)
Districts

Receipts
from

Payments
to

Total
Settlements

Percentage
of Total

Boston ...4
New York
Philadelphia
Cleveland
...
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Totals
Settlements between
Head Office a n d
Branches:
Richmond
Baltimore
Charlotte
Totals

$ 151,312
2,377,347
506,395
470,313
314,196
297,587
86,774
15,953
35,843
34,816
50,096
$4,340,632

$ 139,590
2,290,026
554,439
428,170
355,142
303,647
125,134
7,241
29,606
19,419
84,214
$4,336,628

$ 290,902
4,667,373
1,060,834
898,483
669,338
601,234
211,908
23,194
65,449
54,235
134,310
$8,677,260

3.35
53.79
12.23
10.35
7.71
6.93
2.44
.27
.75
.63
1.55
100.

777,384
526,867
421,824
$6,066,707

924,891
434,395
366,789
$6,062,703

1,702,275
961,262
788,613
$12,129,410

Settlements of transit clearings between Richmond and all
other reserve banks were higher in 1935 than in 1934, and
total settlements between the Richmond bank and the eleven
others increased by $674,524,000, or 8.4 per cent. The percentages of settlements between Richmond and other individual districts to total settlements with the eleven were larger
in 1935 than in 1934 with Philadelphia, Cleveland, Atlanta,
Chicago, Dallas and San Francisco; were the same with Minneapolis and Kansas City; and were smaller with Boston, New
York and St. Louis. The Federal Reserve Bank of Richmond
received more from than it paid to Boston, New York, Cleveland, Minneapolis, Kansas City and Dallas, but paid more to
than it received from Philadelphia, Atlanta, Chicago, St.
Louis and San Francisco. Receipts from other districts exceeded the total payments to other districts in 1935 by
$4,004,000.
WIRE TRANSFERS OF FUNDS

As a part of its service to member banks, the Federal Reserve bank makes transfers of funds for them without cost to
the transferring banks. This service is facilitated by the operation of private leased wires connecting all reserve banks and
branches and the Board of Governors of the Federal Reserve
System. The Federal Reserve Bank of Richmond made
58,653 transfers for member banks in 1935, totaling $4,215,


18

TWENTY-FIRST ANNUAL REPORT OF THE

252,000, compared with 68,161 transfers totaling $4,005,232,000 made in 1934. There were 85,706 messages sent or received over the private wire in 1935, compared with 92,869
telegrams transmitted in 1934. In its transaction with and
for member banks, the Bank also made extensive use of commercial telegraph service.
FEDERAL RESERVE NOTE CIRCULATION

The average daily circulation of Federal reserve notes in
1935 was $161,057,000, an increase of 5.5 per cent over the
average of $152,644,000 in 1934. Average daily circulation
last year exceeded that of 1934 in every month of the year.
The movement of Federal reserve note circulation in 1935 followed seasonal trends on the whole. Average daily circulation declined during January, February and March, turned
upward slightly in April, and then dropped more sharply in
May. There was little change in June and July, but in August
tobacco markets opened in the Carolinas and circulation
turned upward, rising steadily through September, October,
November and December. The low point in 1935 circulation
was a daily average of $148,910,000 in May, and the high
average was $185,386,000 in December. The low and high
points were in the same months as in 1934, but the low point
in 1935 was 5 per cent above the low in 1934, and the high
average last year was 7 per cent above the high month in the
preceding year.
CURRENCY AND COIN SERVICE

Currency and coin shipped to member banks by the Federal Reserve Bank of Richmond in 1935 totaled $419,512,185,
an increase of 5.8 per cent over $396,633,470 shipped to members in 1934. Shipments to non-member banks, on the other
hand, totaling $15,679,712 in 1935 showed a decrease of 13.6
per cent under $18,158,322 shipped in 1934. Total shipments
to all banks amounted to $435,191,897 last year and $414,791,792 the year preceding, an'increase in 1935 of 4.9 per
cent. Currency and coin received from member banks totaling $385,659,341 and from non-members totaling $40,963,023
in 1935 showed increases of 2.8 per cent and 1.1 per cent, respectively, over $374,977,703 received from member banks
and $40,501,393 received from non-member banks in 1934.
The total amount of currency and coin shipped to or received
from all banks in 1935 was $861,814,261, an increase of 3.8
per cent over $830,270,888 shipped to or received from member and non-member banks in 1934.
All shipping and insurance charges on currency and coin
shipments to and from member banks are paid by the Federal
Reserve bank, and it also defrays charges on remittances from
non-member banks in settlement for cash letters, but all other



FEDERAL RESERVE BANK OF RICHMOND

19

shipments to or from non-member banks are made at the expense of the non-members concerned in the transactions.
These shipments at the expense of the non-member banks are
usually in the nature of Sub-treasury transactions.
RESERVE POSITION

The average monthly ratio of cash reserves to note and
deposit liabilities combined was 65.55 in 1935, a decrease of
1.16 points under the average ratio of 66.71 in 1934, most of
the decrease occurring in the first half of the year. The
monthly average ratios were lower in 1935 than in 1934 in
January, February, April, May, June and September, but were
higher in March, July, August, October, November and December. The highest monthly average ratio in 1935 was 68.69
in December, and the lowest was 62.17 in June. The lower
average ratio for 1935 is explained by an increase of 21.2 per
cent in deposits, while cash reserves rose only 10.9 per cent.
Average daily deposits totaled $161,885,640 in 1935 and
$133,525,313 in 1934; daily average note circulation was
$161,057,077 in 1935 and $152,643,720 in 1934; and daily
average cash reserves totaled $211,679,090 last year and
$190,916,590 in the preceding year. Deposits showed the
highest daily average in December and the lowest in January;
note circulation was highest in December and lowest in May;
and cash reserves were highest in December and lowest in
June.
CHANGES IN MEMBERSHIP

The Federal Reserve Bank of Richmond had 403 member
banks when 1935 began, and during the year 7 new members
were added by the organization of 4 National banks and the
admission to membership of 3 State banks. On the other
hand, 6 members were lost during the year, due to 1 merger
between two member banks, voluntary liquidation of 2 members, suspension and insolvency of 2 members, and 1 absorption of a member by a non-member bank. There was therefore a gain of 1 member bank in 1935, bringing the number
of member banks up to 404 at the close of business December
31, 1935, of which 339 were National banks owning 65,382
shares of stock and 65 were State bank members owning
26,410 shares. The increase in membership and additions to
capital and surplus added 2,902 shares to the member bank
holdings of stock in the Federal Reserve Bank of Richmond
last year, but losses in membership and reductions in capital
and surplus subtracted 10,610 shares, a net decrease of 7,708
shares during 1935. The net decrease in paid-up capital of
the Bank in 1935 was $385,400.



20

TWENTY-FIRST ANNUAL REPORT OF THE

BANK RELATIONS DEPARTMENT

The Bank Relations Department, which employs all or
part time of five men, serves as the principal contact between
the Federal reserve bank and its members. Field work by
two men working from Richmond, one from Baltimore and
one in the Carolinas, is directed by a Manager of the Department at the Head Office in Richmond. The personnel visits all
member banks each year, and as many non-member banks as
the schedule permits. In 1935 the field men paid 443 visits
to member banks and 35 visits to non-members. A special
effort was made during the year to acquaint member banks
with the principal changes in the statutes relating to Banking
and with the rulings and interpretations of the Board of Governors of the Federal Reserve System. In addition to field
work, much relationship work was done at the Home Office
when bankers visited Richmond, and the personnel of the department also kept up a considerable volume of detailed analysis work on member bank condition reports. Finally,
members of the department attended all State Bankers' Conventions and several Group Meetings in the Fifth district.
EXAMINATION DEPARTMENT

The Bank Examination department, operating under the
direct supervision of the Assistant Federal Reserve Agent,
performed a larger volume of work with about the same personnel in 1935 than in 1934. At the close of business December 31, 1935, the department had 10 examiners, 5 assistant
examiners, 1 clerk, 1 messenger-clerk, and 5 stenographers.
Field work done by the examiners in 1935 was as follows:
Banks

Branches

78

59

Examinations of State Member Banks in conjunction
with State Departments
Examinations of Trust Departments of State Member
Banks made in the course of regular joint examinations

31

Examinations of Trust Departments of State Member
Banks made separately from regular examinations....

10

Participation in a regular examination in connection
with application for membership

1

State Banks examined in connection with application
for membership

2

Special Visits to State Banks

6

Special Visit to Federal Reserve Bank of New York

1




129

59

FEDERAL RESERVE BANK OF RICHMOND

21

PERSONNEL

Twelve regular meetings of the Board of Directors of the
Federal Reserve Bank of Richmond were held in 1935. There
was one change in the Board membership during the year, due
to the sudden death on December 20 of Mr. William W. Hoxton, Chairman of the Board and Federal Reserve Agent. In
the Fall elections, member banks in Group 3 re-elected L. E.
Johnson, of Alderson, W. Va., as a Class A director and banks
in Group 2 re-elected Edwin Malloy, of Cheraw, S. C, as a
Class B director, both gentlemen to serve until December 31,
1938. Prior to his death, the Board of Governors of the Federal Reserve System re-appointed William W. Hoxton as a
Class C director for a three-year term ended December 31,
1938, and re-designated him as Chairman of the Board and
Federal Reserve Agent until March 1, 1936. Mr. Frederic
A. Delano, of Washington, D. C, was re-designated as Deputy
Chairman. The Board of Governors did not fill the vacancy
on the Board of Directors caused by the death of Mr. Hoxton.
At the December meeting, the Board of Directors reelected Chas. M. Gohen, of Huntington, W. Va., as the member of the Federal Advisory Council for the Fifth district, and
re-elected Chas. E. Rieman, of Baltimore, as alternate. Edmund P. Cohill, Hancock, Md., and Wm. H. Matthai, Baltimore, members of the Board of the Baltimore Branch, and C.
A. Cannon, Concord, N. C, and John Lindsay Morehead,
Charlotte, members of the Board of the Charlotte Branch, retired at the expiration of their terms on December 31, 1935.
All four gentlemen were appointees of the Board of Governors of the Federal Reserve System. Other Branch directors
whose terms expired on December 31, 1935, were re-appointed
by the Board of Directors of the parent Bank.
During the year there were three changes in the official
personnel of the Bank. Mr. Charles A. Peple, Deputy Governor since July 1915, retired on September 1, 1935, on account
of illness. John S. Walden, Jr., who had been an officer of
the Bank since January 22, 1919, and Controller since January 1, 1924, was made Deputy Governor on October 10, 1935.
Mr. William W. Hoxton, Chairman of the Board and Federal
Reserve Agent since September 1923, died on December 20,
1935. No other changes occurred in the official personnel at
the Head Office in Richmond or at the Baltimore or Charlotte
Branches during the year.
The total number of officers and employees at the three
offices on December 31, 1935, was 732, a decrease of 8 as compared with December 31, 1934. Of this total number, 150
were assigned to work for various Government agencies which
reimburse the Bank in full for their salaries.



22

TWENTY-FIRST ANNUAL REPORT OF THE

BALTIMORE BRANCH

The Baltimore Branch territory embraces the entire State
of Maryland and thirty counties in northern West Virginia, as
follows:
Barbour
Berkeley
Braxton
Calhoun
Doddridge
Gilmer
Grant
Hampshire

Hardy
Harrison
Jackson
Jefferson
Lewis
Marion
Mineral
Monongalia

Morgan
Nicholas
Pendleton
Pleasants
Preston
Randolph
Ritchie

Roane
Taylor
Tucker
Upshur
Webster
Wirt
Wood

At the close of the year 1935 there were 115 member
banks and 148 non-member banks in the territory served by
the Baltimore Branch operating on an unrestricted basis, all
of the non-members being on the par list. In addtion, the
Branch was handling checks at the end of the year on six nonmember banks in West Virginia which were operating under
restrictions.
CHARLOTTE BRANCH

The Charlotte Branch Territory embraces thirty-four counties in western North Carolina and twenty-one counties in
western South Carolina, as follows:
NORTH CAROLINA
Alexander
Alleghany
Ashe
Avery
Buncombe
Burke
Cabarrus
Caldwell
Catawba
Cherokee
Clay
Cleveland
Gaston
Graham
Haywood
Henderson
Iredell

Jackson
Lincoln
Macon
Madison
McDowell
Mecklenburg
Mitchell
Polk
Rowan
Rutherford
Stanly
Swain
Transylvania
Union
Watauga
Wilkes
Yancey

SOUTH CAROLINA
Abbeville
Aiken
Anderson
Cherokee
Chester
Edgefield
Fairfield
Greenville
Greenwood
Lancaster
Lauren s

Lexington
McCorcnick
Newberry
Oconee
Pickens
Richland
Saluda
Spartanburg
Union
York

At the close of 1935 there were 47 member banks, 10 par
non-member banks, and 110 non-par non-member banks operating in the Charlotte Branch territory on an unrestricted
basis. Out-of-town branches are counted as separate banks.
FIDUCIARY POWERS

Section 11 (k) of the Federal Reserve Act, as amended,
authorizes and empowers the Board of Governors of the
Federal Reserve System "to grant by special permit to national



FEDERAL RESERVE BANK OF RICHMOND

23

banks applying therefor, when not in contravention of State
or local law, the right to act" in any fiduciary capacity in
which State banks, trust companies, or other corporations
which come into competition with national banks are permitted to act under the laws of the States in which the applying
national banks are located. In 1935, upon recommendation of
the Federal Reserve Agent, the Board of Governors of the
Federal Reserve System granted full trust powers to the Citizens National Bank, Hampton, Va., on June 13. The right to
exercise limited trust powers was conferred on two banks, the
application of the National Bank of Logan, Logan, W. Va.,
being approved on April 18, and that of the Commercial National Bank, Spartanburg, S. C, on July 12.
FISCAL AGENCY OPERATIONS

The Federal Reserve Bank of Richmond handled a larger
volume of work as Fiscal Agent of the United States in 1935
than in 1934. There were 6 issues of Treasury Notes last
year, counting additional offerings of the same Series as separate issues, 9 issues of Treasury Bonds, 4 issues of Miscellaneous Bonds, and 75 offerings of Treasury Bills sold on bid. Total
subscriptions in the Fifth district to Treasury Notes, Treasury
Bonds and Miscellaneous Bonds amounted to $564,213,675, of
which $303,117,675 was allotted to the subscribers. Bids
totaling $23,775,000 were made on Treasury Bills, but only
$4,211,000 was allotted. Including deliveries, redemptions
and exchanges of all classes of Government securities, the
Bank handled 387,338 pieces with an aggregate value of
$844,859,000 in 1935, compared with 208,916 pieces valued
at $613,576,000 in 1934, increases last year of 85 per cent in
number of pieces and 38 per cent in total value.
In addition to the work done as Fiscal Agent of the United
States Treasury, the Bank also acted as Fiscal Agent, Depositary, and Custodian of securities for other Government agencies, namely, the Reconstruction Finance Corporation, the
Federal Emergency Administration of Public Works, the Federal Farm Mortgage Corporation, and the Home Owners' Loan
Corporation. Fiscal Agency and Custodian work requires approximately 150 persons, all of whom are employees of the
Bank but whose salaries are reimbursed by the several Agencies for which they work.